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Angel tax: Govt to only act against rogue players

TNN | Updated: Feb 12, 2019, 06:09 IST

Piyush Goyal (File photo)

NEW DELHI: Amid fresh unease over the issue of 'angel tax', the government on Monday promised to protect honest startups that raise funds from investors at a premium, while acting against rogue players, as it sought to comfort jittery investors, some of whom are looking to put fresh funding on hold.

"It is natural that in startups receiving venture capital funding, an assessment is made on the valuation and a premium is paid. The government is taking steps to ensure that bad companies face action, while the honest ones that raise money at a genuine premium face no action. I am assuring the country and MPs that the honest will be protected and the dishonest will face stiffest action," finance minister Piyush Goyal told Lok Sabha, while responding to the debate on the interim budget.

Apart from investors, the issue also found an echo in some of the comments made during the debate by Congress lawmakers. But Goyal seemed to brush them aside. "An issue of angel tax has been raised. Congress has no understanding of the issue. During Congress' tenure, the way shell companies operated, and shares were issued at a premium and fake hawala companies raised capital, we have stopped that. Because of that, they are facing difficulties, resulting in baseless allegations against us," the minister said as officers toiled to put in place a new architecture.

The department for promotion of industry and internal trade (DPIIT) and the finance ministry are trying to find a solution to the problem after a fresh set of action by the tax department against some companies.

While the startup community is up in arms, accusing the tax department of harassment, authorities have maintained that they are not going after those who are eligible for sops or can explain the details of the payments received. In his response, Goyal did not go into details and focused on highlighting the government's proposals in the interim debate.

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